Gold prices have retreated after a five-day rally that saw the precious metal reach record highs. The pullback comes as the US dollar strengthened and investors capitalised on recent gains. The delayed release of key economic data due to the government shutdown has also left traders seeking alternative indicators to gauge the health of the US economy.
In the absence of official figures, data from private firms is gaining increased attention. According to outplacement firm Challenger, Gray & Christmas, US employers scaled back hiring plans in September and announced fewer job cuts. A stronger dollar weighed on bullion, as gold is priced in the US currency. The recent successive peaks also made gold more susceptible to profit-taking, with the metal having been in overbought territory for the past month.
Spot gold slipped 0.2 per cent to $US3,856.58 an ounce as of 5.18pm in New York (7.18am AEST). The Bloomberg Dollar Spot Index rose 0.1 per cent. Other precious metals also saw movement, with silver and palladium both falling, while platinum remained relatively stable.
This year, gold has soared 47 per cent, potentially marking its largest annual gain since 1979. The rally has been bolstered by central bank purchases and increasing holdings in gold-backed exchange-traded funds, as the Federal Reserve resumed cutting interest rates. Traders are betting that the Fed will cut rates twice more this year to support a weakening labour market. Lower borrowing costs typically benefit non-yielding gold and make it cheaper for buyers when the dollar weakens.
